Richard Florida
by Richard Florida
Fri Sep 3rd 2010 at 12:10pm UTC

Mapping Troubled Housing Markets

On Tuesday, The Daily Beast ran my new Housing-Mortgage Stress Index. While the U.S. housing market saw a sharp drop in July and millions of homeowners remain underwater, housing market troubles vary significantly by metro region.

The Housing-Mortgage Stress Index shows the U.S. metros whose housing markets — and homeowners — face the highest levels of stress and danger of foreclosure and falling prices. The index, developed with my collaborator Charlotta Mellander, is based on three variables:

  • Negative equity — percent of mortgages where owners owe more than their homes are worth.
  • Loan-to-value ratio — total Mortgage Debt Outstanding divided by Total Property Value — both from Core Logic.
  • Monthly mortgage cost-to-income ratio from the U.S. Census American Community Survey.

The index weights all three variables equally and covers 142 U.S. metros.

The first map above, prepared by Zara Matheson of the Martin Prosperity Institute based on data from Core Logic, shows the percentages of mortgages that are underwater across U.S. metros. Las Vegas tops the list with nearly three-quarters of all mortgages underwater. More than half of all mortgages are underwater in Stockton, Modesto, Vallejo-Fairfield, Bakersfield, and Riverside, California; Port St. Lucie, Orlando, Cape Coral, and Fort Lauderdale, Florida; Phoenix, and Reno. In Miami, Tampa, and Detroit, more than 45 percent of all mortgages are underwater.

The second map shows the performance of U.S. metros on the overall Housing-Mortgage Stress Index. The most troubled metros are located primarily in California, Florida, and Nevada. Nine of the top 20 troubled metros – including all five of the top five – are located in California (Stockton, Modesto, Vallejo-Fairfield, Riverside-San Bernardino-Ontario, Bakersfield-Delano, along with Fresno, Visalia-Porterville, Sacramento, and Salinas). The six Florida metros on the list are Miami, Orlando, Port St. Lucie, Deltona-Daytona Beach-Ormond Beach, Lakeland-Winter Haven, and Palm Bay-Melbourne. Rounding out the top 20 metros are Las Vegas and Reno, Nevada; Phoenix; Provo, Utah; and Greely, Colorado.

Among large metros — those with more than 1 million people — Tampa, Detroit, Atlanta, San Diego, Jacksonville, Washington, D.C., Virginia Beach, Chicago, and L.A. show high levels of housing-mortgage stress, along with the five noted above — Riverside, Las Vegas, Orlando, Phoenix, Sacramento, and Miami.

There is still a great deal of localized stress in the U.S. housing market, and recovery is likely to take a lot longer than most people anticipate.

One Response to “Mapping Troubled Housing Markets”

  1. Michael Wells Says:

    Once again, California’s long-suffering Central Valley is at the bottom of the pile, with over half of houses under water. I grew up in Modesto and hate to see it, but the signs are in every study.

    I wonder if some of the yellow areas with very low numbers are because not many people were buying houses there in the last 10+ years, so the area missed the bubble? In other words, they might be indications of weak local economies rather than thrifty homeowners. Also maybe a larger percentage of older people who have owned their homes for decades, and maybe not many younger families?

    Finally of course, these are large scale metro areas. Some parts of each region are doing better than others. In Portland and probably others, close in neighborhoods are suffering less than the further out suburbs. I can’t think of any foreclosures in my close in neighborhood — maybe because values held up and someone in financial straits could sell their house without losing money.